75 percent of restaurant operators expect higher revenue in 2021 than pre-COVID times, reveals F&B report
Mita Srinivasan
10x Industry

75 percent of restaurant operators expect higher revenue in 2021 than pre-COVID times, reveals F&B report

POSist PRIME Report reveals trends like cloud kitchens, dining out and technology adoption that is shaping the future of the restaurant industry in the UAE with one in three restaurant operators in the UAE now running at more than 60 percent revenue compared to pre-COVID levels

POSist in collaboration with Dubai Restaurants Group has announced the findings from its recent PRIME (POSist Restaurant Industry & Market Evolution) Report UAE Edition through an online panel where the some of the members of the ecosystem discussed the results.

According to the report, top executives of restaurants in the UAE indicated a sentiment of revival. After a challenging year for restaurants, both local and international chains feel optimistic about the growing revenues. Nearly 75 percent of restaurant operators expect the revenue to increase compared to pre-COVID times. Restaurant sales continue to improve as diners become more comfortable with contactless dining and ordering food online. One-third of restaurant operators surveyed mentioned that they are now operating at 60 percent of their pre-COVID-19 revenue levels (as of March 2021).

Before the pandemic, a significant share of restaurant businesses came from dine-in customers, and deliveries complemented the orders. However, according to the survey, the situation has changed post-COVID-19; restaurant operators shared that as high as 66 percent of diners now prefer ordering online over dining out. Nearly 36 percent of respondents said that they expect more than 60 percent of their revenue in 2021 to come from food deliveries compared to a small group of 10 percent of restaurateurs who registered similar delivery returns in the previous year.

However, both Naim Maadad who is also the Chairman at Gates Hospitality that manages brands like Folly and Reform, and Fay Economides, Executive Managing Director, M Management Company that manages several restaurants including Mythos, stressed that online ordering and delivery needs to reflect the brand and what it stands for.

Economides added, “Delivery should be about what is right for the restaurant and its customers. You need to look at your portfolio and focus on which brands delivery would work for. The food and the experience need to match the brand.”

Another interesting conversation was around cloud kitchens. The report revealed that 70 percent of its respondents placed their bet on setting up a Cloud Kitchen or a delivery-only outlet for their brand. Ashish Tulsian, CEO and co-founder of POSist, pointed out that while a large number of their clients have explored and set up cloud kitchens as part of their survival during the lockdown, he added a note of caution. “The picture is not that rosy, and the business economics of setting up cloud kitchen or online delivery is very different. There are a lot more moving parts to investing in cloud kitchens and I strongly believe that while it is going through its surge stage for several reasons, it will also go through its own correction as businesses realise all that is entailed in setting up a cloud kitchen is not what its cracked up to be and not always right for all businesses.”

Maadad felt that its better for restaurateurs to focus on their key areas of expertise instead of jumping into a new fad or trend unless it fits in with their brand. “Jumping on a trend without doing the right level of due diligence is not good for our industry,” he added.

The discussion also touched on some of the other challenges faced by the restaurant sector with 62 percent citing cash flow as a major problem, 51 percent cited rent and a further 49 percent talked about the challenges of hiring and retaining staff as a challenge.

Maadad who is also the Founding Board Member of Dubai Restaurants Group, said, “Operating a business in UAE is expensive and what we have witnessed in the last 15 months where the authorities have put in relief packages has helped a little but it’s not quite enough. As DRG, we are working with the authorities to create initiatives like the recently released Ramadan rules in Dubai that ease some of these operating costs. We need to do more to ease the burden on restaurant operators, to better control the cost of conducting business from visas to rent to overall costs.”

Tulsian added, “The pandemic has been a learning experience for the industry. It has opened up opportunities for the industry to innovate and be future-proof. One of the key takeaways from the survey is that restaurants are becoming technology-driven in every aspect of their business, from managing front of the house to the back-of-house operations.”

All of the panellists are optimistic about the future of the sector. Tulsian thinks that brand integrity, good business economics and supported by the fundamentals of experience will sustain and grow this sector.